BOSNIA- DODIK BACKS OUT OF DEFENSE PROPERTY DEAL,

C O N F I D E N T I A L SECTION 01 OF 03 SARAJEVO 000246

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SIPDIS

DEPT FOR EUR (DICARLO),EUR/SCE (HOH, SILBERSTEIN, FOOKS,
STINCHCOMB),EUR/RPM
DEFENSE FOR FATA, BEIN
NSC FOR BRAUN

E.O. 12958: DECL: 02/07/2018
TAGS: PGOV PREL MARR BK
SUBJECT: BOSNIA- DODIK BACKS OUT OF DEFENSE PROPERTY DEAL,
SIGNALS INTENT TO KEEP ARMS AND AMMUNITION

REF: A. SARAJEVO 162


B. SARAJEVO 150

C. SARAJEVO 129

Classified By: Ambassador Charles English for reasons 1.4 (b) and (d)

SUMMARY
--------------


1. (C) Reneging on a clear commitment to the Ambassador and
NATO HQ, Republika Srpska (RS) Prime Minister Milorad Dodik
failed to have his government approve the transfer agreement
on movable defense property on February 7 and instead
referred the matter to a working group to negotiate a
"compromise text" with the Council of Ministers. We had
worked closely with NATO HQ to finalize a transfer agreement
that would ensure that all weapons, explosives and ammunition
were transferred to the state. On January 31, the Ambassador
and NATO officials agreed to amend the text to address
reasonable concerns raised by Dodik and RS negotiators. Dodik
himself had pledged numerous times to support the January 31
agreement as drafted. The Federation government approved the
text on February 6, and PM Spiric's office signaled their
intention to have the agreement approved at the next session
of the Council of Ministers (COM). Dodik's decision not to
honor his commitments sabotages this work. It is now
extremely unlikely that movable defense property issues will
be resolved prior to the February PIC. This action also
raises profound questions about his long-term strategy in the
RS, particularly in light of his aggressive campaign to
undermine state-level institutions. We believe that we cannot
back away from this latest challenge from Dodik, as it is
directly tied to the maintenance of a safe and secure
environment in Bosnia. End Summary.

RS GOVERNMENT FAILS TO APPROVE PROPERTY AGREEMENT
-------------- --------------


2. (C) Despite numerous commitments made to the Ambassador
and NATO HQ Sarajevo, RS Prime Minister Milorad Dodik did not
press the RS government to approve the transfer agreement on
movable defense property to which he had previously agreed at
its session February 7. The RS government instead decided to
form a RS working group to "harmonize the agreement." We
also understand that Dodik is insisting that the Council of
Ministers must first approve a draft agreement. Presumably,
the RS working group will then "harmonize" its proposals with
the CoM's agreement, working out "points of contention" and
amending the CoM draft to address "entity concerns." We will
have a clearer understanding of the negotiating gambit early
next week, but it strikes us as another attempt to end run
our bottom-line about the transfer of weapons from the
entities to the state.

TEXT INCORPORATES ALL RS AMENDMENTS
--------------


3. (C) After a lengthy discussion with the Ambassador January
31 in Banja Luka, Dodik affirmed that he supported the
principle that all arms and ammunition must be transferred to
the state, and stated he would support the agreement and
secure its approval with a few small technical changes.
Lawyers from NATO HQ then met with Dodik's Chief of Staff, RS
"Military" Advisor Dusko Cetkovic and other senior Dodik
staff to amend the agreement along the lines proposed by
Dodik:

-- that surplus non-lethal movable property would remain the
property of the entities unless MOD declared within eight
months that it was necessary for current or future defense
needs;

-- that decisions by the MOD commission tasked with
disposition (i.e. sale, donation, destruction) of surplus
property would be made by consensus; and,

-- that the state would execute outstanding contracts for the

SARAJEVO 00000246 002 OF 003


sale of defense items previously concluded by the entity
MODs, but that all proceeds from the sales would go to the
entities.

The NATO HQ lawyers accepted the proposed amendments from the
RS representatives verbatim, and the RS team pronounced the
agreement acceptable. As the proposed changes did not affect
our core goals, we also gave our support for the text.

FIRST ATTEMPT TO BACKTRACK
--------------


4. (C) In a follow-up conversation on February 1, Dodik told
the Ambassador that he accepted the January 31 agreement in
principle, and was "95 percent sure" it would suffice for his
government. He promised to call the Ambassador later that
evening to give his "final approval," which he implied was a
foregone conclusion. In the subsequent phone call, Dodik
asserted that he required a few more "technical changes," but
otherwise the agreement was acceptable. Cetkovic later sent
the proposed changes to NATO HQ. The changes, far from being
technical, were substantive, and were at odds with Dodik's
January 31 pledge. Cetkovic's proposed amendments created
loopholes which allowed the entities to maintain stockpiles
of arms and ammunition, and introduced an entity veto in the
disposal of military property that violated our principle of
state-level ownership of all arms and ammunition. We and
NATO HQ rejected the proposals, stressing that the document
had already been amended to incorporate reasonable RS
interests and that proposals allowing the RS to keep arms and
ammunition were unacceptable.

DODIK GIVES UNEQUIVOCAL SUPPORT...
--------------


5. (C) The Ambassador called Dodik again on the evening of
February 3 to stress that we expected him to adhere to his
commitment and support the January 31 agreement, adding that
the new Cetkovic proposals were unacceptable. The Ambassador
stressed that we and NATO HQ had addressed his and the RS
government's reasonable concerns, adding that the attempt to
reopen negotiations appeared obstructionist. The Ambassador
told Dodik that the issue was inherently about the
maintenance of a "safe and secure environment" in Bosnia, and
in no way was it acceptable for the entities to maintain any
stockpiles of military hardware. Backing away from
Cetkovic's proposal, Dodik repeated that he accepted the
January 31 draft of the agreement and would submit it to the
RS government for approval that week. Dodik added "I do not
want any of the weapons." The following day we presented the
January 31 text to Dodik's Chief of Staff. She later
informed us that the agreement as submitted was acceptable,
and would be put on the agenda for the RS government session
scheduled for February 7. The NATO HQ Commander, US MG
Wightman, also called Dodik on February 5 to stress the
importance of quickly approving the agreement, and Dodik
pledged that the agreement would be approved as written.

... THEN RENEGS
--------------


6. (C) On February 6, we received a copy of the agenda for
the February 7 RS government session. The agenda listed
"consideration" of the draft agreement with the addendum
"with proposed amendments." We immediately called Dodik's
Chief of Staff to query what "proposed amendments" were being
considered. She first told us that nearly all items for the
RS Government's consideration were open to amendment and the
wording on the agenda was standard practice. We pointed out
that the transfer agreement was the only item on the 58 point
agenda that contained the phrase "with proposed amendments,"
and asked whether the government intended to amend the
agreement despite numerous prior assurances to the contrary.
The Chief of Staff informed us that Cetkovic did indeed plan
to propose amendments. The Ambassador called Dodik and
reminded him of his numerous previous commitments, and urged
him to not take an unnecessarily provocative step. Dodik

SARAJEVO 00000246 003 OF 003


only responded "I hear you" and "we'll talk" before ending
the call.


7. (C) In a follow-up conversation with our Banja Luka Branch
Officer directly before the government session on February 7,
Dodik raised numerous concerns with the agreement. Dodik
wanted the RS representative to have veto rights in the MOD's
property disposition committee. He also said that he feared
the agreement would be used as a precedent for the broader
state property issue. (Note. The Bosnian leadership, across
the ideological and ethnic spectrum, has also raised this
concern of precedent, and we have underscored to them all
that the Law on Defense governs defense property issues only.
End Note.) Dodik then claimed to have never read the
agreement. Finally he asserted that the Federation and State
could not be trusted to adhere to its provisions. One of
Dodik's senior advisors later told us the Prime Minister had
told him that he (Dodik) would "do the right thing" even if
he had "to make the United States angry."


COMMENT: APPARENT DECEPTION WITH MALINTENT
--------------


8. (C) The RS government's action in failing to approve the
agreement strikes us as an attempt by Dodik to back out of
his commitments and use Prime Minister Spiric and other SNSD
allies in the COM to either kill the deal or redraft it along
lines more favorable to the RS (i.e. allowing the RS to
maintain ownership of weapons, ammunition and explosives).
This is unacceptable. Anything but the full transfer of all
these materials to the state is at odds with ensuring that
Bosnia is a "safe and secure environment." We are
maintaining that the agreement on the table, which PM Spiric
has told us he fully supports, is non-negotiable and we
expect PM Dodik to fulfill his commitments to the Ambassador
and NATO HQ and secure its approval by the RS government.
Unless Dodik reverses course, it is unlikely that the
agreement will be approved before NATO's Bucharest Summit,
let alone the February PIC.


9. (C) Dodik's behavior during this entire process has been
troubling-- he deliberately chose to bring himself into a
direct confrontation with us over an issue critical to
Bosnia's security, even after we and NATO addressed all of
his legitimate interests. Dodik had an agreement on the
table that provided the RS with 80 percent of the profits
from any surplus items sold, and provided direct entity
involvement in identifying buyers for surplus items.
Nonetheless, he has signaled that the RS has designs to
maintain control over stockpiles of arms and ammunition. We
kept the agreement and negotiations out of the media, NATO HQ
negotiated in a transparent manner and largely accepted RS
amendments verbatim, and we encouraged the other parties, the
Federation and MOD, to accept the RS amendments, since they
were consistent with their core interests. We did this to
ensure the issue did not become a political football, and to
provide Dodik with the political cover he often claims to
require. We woke up February 7 to a banner headline in the RS
government supported daily Glas Srpske announcing "Surplus
Military Weapons Belong to the RS," which signaled that the
RS government would reject the agreement. Our experience with
Dodik suggests that the headline also signals his intention
to frame the issue of defense property as an assault on the
RS. It appears that Dodik now seems intent on dragging out
the process with us as he did with the High Representative
following the imposition of the October 19 measures and with
the EU during police reform negotiations. End Comment.
ENGLISH